I'm sure more than a few silver/gold-bug eyebrows have been raised now that Paulson has tapped the Exchange Stabilization Fund's 50 billion bucks (or what's left of it) for use to bail out money market funds, etc. Though it's been denied by the US government, there has long been a suspicion that the ESF has been involved in gold market shenanigans for some time. In fact, there's quite a bit of literature showing the evidence and building te case on ESF/gold/swaps/etc. entanglement. Whether it's true or not, it's pretty clear the gov't. has the authority (see below). And now that the ESF's cash is now openly in play, will any or it be more openly used to cap gold, or to bail out some favored gold shorts or tie it in with some other bizarre behavior of gold?
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"The Fund, which now amounts to $50 billion, was created in 1934 to conduct interventions in foreign exchange markets. The enabling statute gives the president and Treasury secretary enormous latitude to act without prior consent of Congress. As amended in the late 1970s, according to the Treasury the law says, “Consistent with the obligations of the Government in the International Monetary Fund (IMF) on orderly exchange arrangements and an orderly system of exchange rates, the Secretary …, with the approval of the President, may deal in gold, foreign exchange, and other instruments of credit and securities.” The law limits terms of loans from the fund to six months unless the president notifies Congress that there are “unique or emergency circumstances.”

http://blogs.wsj.com/economics/2008/...